Wednesday, 10 July 2013

Why EU-US negotiations on free trade is so important

This week saw the start of negotiations on an EU-US free trade agreement that could ultimately prove to be hugely beneficial to the UK beef and sheep meat sector on a wider global scale.

Putting arguments between the US and some member states about who may or may not be spying on whom to one side, the negotiations are clearly a potentially lucrative step in the right direction. For agriculture, the aim is to remove duties and to tackle non-tariff barriers.

The EU is the US's largest trading partner, while the US is the EU's second largest trading partner, with 17.6 per cent and 13.9 per cent respectively of each other's trade in goods in 2011. It is estimated that a free trade deal could lead to a 28 per cent increase in EU exports to the US and a 6 per cent increase in total EU exports.

Together, the EU and the US account for almost half of global GDP and one-third of total world trade. Latest estimates show that a comprehensive trade and investment agreement could also increase EU GDP by between 0.5 per cent and one per cent – €86 billion of added annual income for EU economy.

Specifically, for the beef and lamb sector, the negotiations are seeking to address a number of issues, the benefits of which to the UK could reach well beyond the US border. Aims include getting as close as possible to removing all duties and other barriers on agricultural products. It is also looking into ‘behind the border’ obstacles to trade such as different safety standards, particularly the negotiation of an ambitious agreement on sanitary and technical barriers to trade.

As to the benefits for the UK, there is no doubt there are definitely high-value, niche opportunities for beef in the US market. Perhaps more significant, however, are the implications it could have for our trade relationships with other Third Country markets. We often hear how these other countries take their lead from what the US does. Although not cut and dried, an agreement between the EU and US would almost certainly pave the way for positive outcomes when we negotiate on market access for our products with these other countries.

As ever, it is important not to get carried away. While an agreement with the US would be a great stride forwards, a sense of realism has to be retained. Should an agreement be reached, it would allow us to enter into a process with the US authorities to secure individual plant approval for exports. As it stands, there are currently no USDA-approved beef plants in the UK.

Experience tells us that nothing happens overnight on such complex matters. As such, exporting to the US won’t happen immediately but these talks are a step in the right direction.

Further information on the negotiations can be found by clicking here.